1. INTRODUCTION TO OPERATIONS MANAGEMENT Prof. Kaushik Paul

2. 2 OBJECTIVES To recognise that Operations Management exists The Operations Management Framework To understand the concepts of core and value added services To understand how Operations management is used in practice The position and role of the Operations Management function Operations management activities To understand how the transformation process works Pure Services vs. Pure Goods: The continuum The Operations Management Framework revisited Historical Development of Operations Management (OM)

3. 3 Kitchen unit manufacturing operation Back office operation in a bank They are all operations Take-out / restaurant operation Retail operation

4. 4 Operation’s strategic objectives ENVIRONMENT Operations strategy The operation’s competitive role and position Input transformed resources Improvement Design Materials Information Customers Output products and services Input resources Customers Facilities Staff Planning and control Input transforming resources ENVIRONMENT THE OPERATIONS MANAGEMENT FRAMEWORK

5. 5 CORE SERVICES DEFINED Core services are basic things that customers want from products they purchase

6. 6 Quality Flexibility Speed Price (or cost Reduction) CORE SERVICES PERFORMANCE OBJECTIVES Operations Management

7. 7 VALUE-ADDED SERVICESDEFINED Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way

8. 8 Problem Solving Sales Support Information Field Support VALUE-ADDED SERVICE CATEGORIES Operations Management

9. 9 The “technological” specification of its product/service? Product/Service Technology The way it produces its goods and services? Marketing Operations The way it positions itself in its market? OPERATIONS MANAGEMENT IN PRACTICE:WHERE DOES THE BUSINESS GET ITS COMPETITIVE ADVANTAGE FROM?

10. 10 which gives which funds etc. Mass fashion orientation but also Increased variety does not increase costs but because volume is high THE THREE FUNCTIONS WORKING TOGETHER .... e.g. SWATCH Further innovations Innovative plastic design with few parts which funds Product/ service design allows Standardize, easy to make product at high volume so low cost Marketing Operations Extended range

11. 11 Core functions Engineering/ technical function Support functions Accounting and finance function Product/services development function Others Operations function Marketing function Human resources function Information/ technical (IT) function A broad definition of operations management CORE AND SUPPORT FUNCTIONS

12. 12 THE POSITION AND ROLE OF THE OPERATIONS FUNCTION Accounting and finance Product development Operations Marketing Call on Manage Retranslate Conduct Church newcomers appeals scriptures weddings Fast food chain Advertise on Pay Design Make television suppliers hamburgers hamburgers Furniture manufacturer Sell to D esign new Assemble Pay staff stores furniture furniture Process perspective Identify Raise D evelop Make and needs capital product distribute

13. 13 The best way to start understanding the nature of “Operations” is to look around you Everything you can see around you (except the flesh and blood) has been processedby an operation Every service you consumed today (radio station, bus service, lecture, etc.) has also been producedby an operation Operations Managers create everything you buy, sit on, wear, eat, throw at people, and throw away

14. 14 IKEA STORE OPERATIONS MANAGEMENT ACTIVITIES SOME OPERATIONS MANAGEMENT ACTIVITIES AT IKEA Design a store layout which gives smooth and effective flow Ensure that the jobs of all staff encourage their contribution to business success Design elegant products which can be flat-packed efficiently Site selection for stores of an appropriate size in the most effective locations Continually examine and improve operations practice Maintain cleanliness and safety of storage area Monitor and enhance quality of service to customers Arrange for fast replenishment of products

15. 15 TRANSFORMED RESOURCES MATERIALS INFORMATION CUSTOMERS FACILITIES STAFF TRANSFORMING RESOURCES THE TRANSFORMATION PROCESSES ALL OPERATIONS ARE TRANSFORMATION PROCESSES ENVIRONMENT GOODS AND SERVICES TRANSFORMATION PROCESS INPUT OUTPUT ENVIRONMENT

16. 16 OPERATIONS MANAGEMENT – BASIC PRINCIPLES Operations management is concerned with producing and delivering products and services Materials Products and services Information Customers All types of enterprise have an operations function, even if it isn’t called ‘operations. Most operations produce both products and services.

17. 17 GOODS VS. SERVICES: THE CONTINUUM THE OUTPUT FROM MOST TYPES OF OPERATION IS A MIXTURE OF GOODS AND SERVICES Pure goods Tangible Can be stored Production precedes consumption Low customer contact Can be transported Quality is evident Crude oil production Aluminium smelting Specialist machine tool manufacturer Restaurant Intangible Cannot be stored Production and consumption are simultaneous High customer contact Cannot be transported Quality difficult to judge Computer systems services Management consultancy Psychotherapy clinic Pure services

18. 18 OPERATIONS STRATEGIC OBJECTIVES INPUT TRANSFORMED RESOURCES OPERATIONS STRATEGY THE OPERATIONS COMPETITIVE ROLE AND POSITION MATERIALS INFORMATION CUSTOMERS Operations strategy IMPROVEMENT DESIGN Operations management PLANNING AND CONTROL FACILITIES STAFF INPUT TRANSFORMED RESOURCES THE OPERATIONS MANAGEMENT FRAMEWORK REVISITED ENVIRONMENT GOODS AND SERVICES INPUT OUTPUT ENVIRONMENT

19. 19 Design Planning & Control Improvement OPERATIONS ACTIVITIES AS FEEDBACK LOOPS Design activities set the basic configuration Planning & control activities guide short/medium term changes Improvement activities guide longer term changes

20. 20 HISTORICAL DEVELOPMENT OF OPERATIONS MANAGEMENT JIT, TQC and factory automation ( Kanban, Poka Yokes, CIM, FMS, CAD/CAM, Robots etc.) Manufacturing Strategy Paradigm (Manufacturing as a competitive weapon) Synchronous Manufacturing (Bottleneck analysis, OPT, Theory of constraints) Service Quality and Productivity (Mass production in the service sector) Total Quality Management and Quality Certification (ISO 9000 etc.) Business Process Reengineering (Radical change paradigm) Supply Chain Management (Supply Network optimization as opposed to optimization at individual firm level) Electronic Commerce (Internet)

21. References: 1) ‘Operations Management’ By Nigel Slack et al. 2e2) ‘Operations Management for Competitive Advantage’ By Chase, Jacobs & Aquilano, 10e HOPE YOU ENJOYED THE CLASS. QUESTIONS PLEASE THANK YOU